The merchandise trade surplus narrowed from a slightly smaller revised CHF4.88 billion in July to CHF4.58 billion in August but was well above the CHF 2.94 billion posted a year ago. The yearly improvement reflected a 1.45 percent increase in exports which was enough to boost surplus as imports fell by 3.17 percent year-over-year in August.

Seasonally adjusted, the surplus stood at CHF3.86 billion, down from July's CHF4.11 billion. Exports decreased 1.23 percent on the month, their third fall in the last four months, while imports fell 0.14 percent, their fourth time since April. The real trade balance also deteriorated as export volumes were down 0.23 percent and imports fell 0.85 percent on the monthly estimates.

Despite monthly fluctuations, the persistent trade surplus suggests a robust economic position. The stagnation of imports indicates that consumers are being cautious. To evaluate the overall economic health and domestic demand, it is imperative to closely monitor this trend. In general, the trade surplus is indicative of favourable economic fundamentals; however, the declines in specific sectors require strategic adjustments to preserve Switzerland's competitive position in the global market. This update leaves the RPI at 14 and the RPI-P at 25, well ahead of market forecasts of the Swiss economy.

The merchandise trade balance measures the difference between the total value of Swiss merchandise exports and imports. The focus is on the balance of trade in goods, excluding precious metals, gemstones, works of art and antiques. This is provided in unadjusted and seasonally adjusted measures for cash and volume.

Changes in the level of imports and exports along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the Swiss franc in the foreign exchange market. Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products such as chocolate and watches, more than half of Swiss exports are in mechanical and electrical engineering and chemicals today. A positive trade balance indicates a trade surplus while a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying more Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. However, if the balance is a deficit, Swiss consumers are buying goods from trading partners which translates into higher demand for foreign currencies placing downward pressure on the value of the Franc.